Question: Why is it often necessary to use a cost formula
Why is it often necessary to use a cost formula for valuing inventory and determining cost of sales? Why can't the actual cost of the goods sold be used to calculate cost of sales in these situations?
Answer to relevant QuestionsWhy is the choice of the inventory cost formula important for tax purposes? Explain.The following information is provided for Heatherton Inc. (Heatherton):On October 31, 2018, Heatherton sold 4,800 units of inventory to customers.Required:Identify which inventory costs would be expensed in October 2018 and ...Explain which of the following businesses would likely use the specific identification cost formula to account for its inventory and which would use FIFO or average cost:a. Customer furniture makerb. Car dealershipc. ...The balances in the current asset and liability accounts for Virden Ltd. (Virden) are provided below. The balances for inventory are provided using the FIFO and average cost formulas.Required:a. Calculate Virden’s current ...IFRS require that companies include overhead in inventory. However, different companies can account for certain overhead costs differently. For example, in 2017, Companies A and B were identical in every respect except for ...
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